Cayman faces funding challenge

Infrastructure needs high over next five years

The infrastructure needs of the
Cayman Islands will face a funding gap over the next five years, a report by
KPMG has found.

The report “Island economies and their infrastructure: An outlook 2010 and beyond” analysed
the infrastructure requirements of island economies and the resulting challenges
for governments.

The report comes at a time when the
Cayman Islands Government is seeking a buyer for its government administration
building with the aim of carrying out a sale and leaseback transaction. The
deal would enable the government to generate revenue and reduce the initial
cost of the infrastructure project, estimated at CI$50 million. The island’s sewerage
system might also be sold for $20 million.

Premier McKeeva Bush said that the
two government infrastructure assets must be sold to balance the budget for the

According to the KPMG survey of the
Cayman Islands and 15 other island economies the short to mid -term demand for
infrastructure needs far exceeds the total annual revenue budget of all
participating countries.

KPMG analysed key areas of
government infrastructure projects, including policy and strategy, procurement,
financing and execution.

KPMG’s head of transactions and
restructuring, Kris Beighton, said “the report highlights the rising
infrastructure challenges faced by local island governments – an issue that is
not unique to any one island.” 

He noted that examples of challenges
the Cayman Islands is facing include the new high schools, the government
accommodation and the sea port.

Over the next five years the Cayman
Islands needs to commit just below 40 per cent of its GDP to the development of
infrastructure, the report found. This is the third highest figure of all 16
analysed island economies.

The report stated that islands
which are primarily dependent on the financial services sector are exposed to
risks to their future revenue, due to taxation and regulatory pressures emanating
from the G20 and the EU.

 “However, the main hurdle for most of these
economies will likely be balancing the large infrastructure requirements with
the inability to raise funds given that government budgets are already
strained,” the report said.

Mr. Beighton added that
“governments are now looking to diversify their revenue sources. Alternative
financing arrangements, such as public private partnerships, need to be
seriously considered as options to overcome the present and future challenges.”

report sees a general gap between what is expected by residents in island
economies and what can be delivered by governments.

this gap is the result of an already high level of debt compared to the GDP of
most analysed countries, this is further compounded by the decline of economic
conditions and a limited access to credit.

But financing is not
the only challenge to infrastructure projects. The lack of a clear strategy,
centralised management and sufficient human resources dedicated to infrastructure
execution were also highlighted by the analysis.


  1. The suggestion has been made to sell government buildings and that is fine if the government wants to rent from the buyers,as when they cannot afford the rent, they can meet under the trees if needed.
    But we should NEVER, EVER sell our necessary utilities or needed communications and transportation. There are examples of other countries doing this, and then they are controlled by and are the slave to the buyer.

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